Success or failure there will certainly depend on your ground game.

I already sent this tenant a failure to pay rent notice (10-day notice) and vacate notice (60-day notice) yesterday.

Failure to disclose is a tall bar in the court room.Allow me to address each of your items:Water in the basement is not uncommon at all, and it likely is a simple fix.  

I would pay the taxes like the other person said, but then seek to foreclose on the original loan for failure to perform (maybe not the right legal term, but I know lenders won’t allow their property to be at risk like that.  

Common problems with this type of loan program are; unrealistic buyer expectations based on HGTV, 'foot in the door' pricing by unscrupulous contractors who hit the client with 'extra' charges in order to boost their bottom line, collusion between buyer and contractor to make some money under the table, failure of the contractor to take out the proper permits, and on and on.

...one of the most common answers is "perseverance" --the ability to repeatedly bounce back time, and time again from failures (especially really big failures).Back when I was a relatively inexperienced investor, I got a 2 am phone call from a tenant.

When a defendant avoids service and thatdefendant’s present location or residence is unknown and the process server hasendorsed the fact of failure of service and the reason therefor on the process andreturned it to the clerk or where the return receipt shows a failure of service, thecourt may, on motion, order service to be made by publication.

Seek failure stories, you will learn more. 

It goes on about notification/failure to do so etc.This has worked really well in a middle/working class neighborhood.Does anyone else do this?

Would love to hear from other members about their successes (or failures) investing outside of the United States.